Are You Ready to Buy Your First Home?
Financial and personal readiness checklist
Buying your first home is one of life's biggest financial decisions. Before you start touring homes in Santa Clarita Valley, assess whether you're truly ready for homeownership—both financially and personally.
Financial Readiness Checklist
- Stable Employment & Income
Lenders typically want to see 2+ years of consistent employment history.
- Emergency Fund Beyond Down Payment
You need 3-6 months of expenses AFTER buying. Don't drain savings entirely.
- Good Credit Score (520+ FHA, no minimum for Conventional per DU, 700+ ideal)
Higher credit scores unlock better interest rates. A 680 vs 740 score can cost you $100+ monthly.
- Low Debt-to-Income Ratio (DTI under 43%)
Your total monthly debt payments should be under 43% of gross monthly income.
- Down Payment Saved (3.5%-20%)
FHA loans allow 3.5% down. Conventional: 3-5%. 20% avoids PMI but isn't required.
- Closing Cost Reserves (2-5% of purchase price)
Expect $10,000-$25,000 in closing costs on a $500K-$700K Santa Clarita home.
How Much Home Can You Afford in Santa Clarita?
Calculate your realistic budget using the 28/36 rule
Understanding your true home affordability is critical before you start shopping. Just because a lender approves you for $800,000 doesn't mean you should spend that much.
The 28/36 Rule
Front-End Ratio
Your housing payment (PITI + HOA) should not exceed 28% of gross monthly income.
Back-End Ratio
Your total debt payments should not exceed 36% of gross monthly income.
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Santa Clarita Home Affordability by Income
| Annual Income | Max Purchase Price | Best Santa Clarita Options |
|---|---|---|
| $75,000 | $300K-$375K | Newhall condos, Canyon Country townhomes |
| $100,000 | $400K-$500K | Saugus condos, Canyon Country homes |
| $125,000 | $500K-$625K | Saugus homes, Newhall homes |
| $150,000 | $600K-$750K | Valencia townhomes, Saugus single-family |
Credit Score Requirements for First-Time Buyers
What you need and how to improve your score
Your credit score is one of the most important factors in mortgage approval and determines your interest rate. A strong credit score can save you tens of thousands of dollars.
Minimum Credit Scores by Loan Type
FHA Loans
Minimum Score
520
3.5% down payment required
Best for: First-time buyers with limited down payment
Conventional Loans
Minimum Score
Per DU
No minimum - Desktop Underwriter approved
Best for: Buyers with good credit seeking lower costs
How to Improve Your Credit Score Fast
Pay Down Credit Card Balances
Get utilization under 30% on all cards. This is the fastest way to boost your score.
Dispute Credit Report Errors
Check all 3 bureaus for errors. 1 in 5 reports have errors affecting scores.
Pay All Bills On Time
Payment history is 35% of score. Even one late payment can drop score 100+ points.
Don't Close Old Credit Cards
Keep old accounts open. Length of credit history is 15% of score.
Down Payment Options: You Don't Need 20%
Low down payment programs available
The biggest myth: "I need 20% down." Most first-time buyers in Santa Clarita put down 3-5%. Here's every down payment option available.
Down Payment Options
3% Down - Conventional 97
Example: $600K home = $18,000 down
Best for: First-time buyers with good credit (680+)
3.5% Down - FHA Loan
Example: $600K home = $21,000 down
Best for: Lower credit scores (520+) or limited savings
First-Time Buyer Programs & Down Payment Assistance
Access thousands in assistance for your purchase
California and Los Angeles County offer generous down payment assistance programs providing $15,000-$30,000 toward your home purchase.
CalHFA MyHome Assistance Program
Down Payment Assistance
Up to 3.5%
typically $15,000-$25,000
Deferred-Payment Junior Loan
No monthly payments, no interest for 30 years
Income Limits Apply
LA County: $204,000 for 1-2 people, $233,640 for 3+ (2024)
CalHFA Dream For All
Program Highlights
- Up to 20% assistance for down payment or closing costs, not to exceed $150,000
- No interest rate and no monthly payment on the down payment assistance
- Appreciation share requirement: CalHFA shares in the appreciation when you sell or refinance
- Voucher system: Homebuyers must register for a voucher. A randomized drawing will select registrants who receive the voucher. This is not first come, first served.
Eligibility Requirements
- First-generation homebuyer: At least one borrower must be a first-generation homebuyer (neither parent has owned a home)
- California resident: One borrower must be a current resident of California
- First-time homebuyers: All borrowers must be first-time homebuyers
- Income requirements: Income must meet CalHFA Income Limits for the county you are purchasing in
Income Limits by County
Select your county to see the maximum income limit
Documents Needed
- California Dream For All Lender Pre-Approval Letter
- Government ID: Passports, driver's license, state-issued ID, military ID, permanent residence cards, visas, or employment authorization documents
- Foster care documentation (if applicable): Foster Care Verification Form/Letter or court documents
- Parent information for designated first-generation borrower(s):
- • Name
- • Date of birth
- • Date of death (if applicable)
- • Current address
- • Proof of parent relationship (Birth Certificate, Adoption papers)
Frequently Asked Questions
Common First-Time Buyer Mistakes to Avoid
Learn from others' experiences
Not Getting Pre-Approved First
Why it's bad: You waste time looking at homes you can't afford and lose out to pre-approved buyers.
Draining All Savings for Down Payment
Why it's bad: First repair or emergency leaves you in debt. Keep 3-6 months expenses after closing.
Skipping the Home Inspection
Why it's bad: You inherit expensive hidden problems. Always get independent inspection ($400-$600).
Making Major Purchases Before Closing
Why it's bad: New car loan or furniture on credit can kill your mortgage approval at the last minute.
Ignoring Total Monthly Costs
Why it's bad: HOA fees, Mello-Roos, insurance, utilities add $400-$800+ monthly beyond mortgage payment.
Buying at Maximum Approval Amount
Why it's bad: You become house-poor with no flexibility for life, savings, or emergencies.